2007 Finance Act Provides New Powers Of Enquiry Into Tax Avoidance Schemes

by Robert Lee, Tax-News.com, London

02 August 2007

HM Revenue and Customs has announced that the 2007 Finance Act, which received Royal Assent on July 19, contains new powers to enquire into cases of suspected non-compliance by promoters of tax avoidance schemes.

The Tax Avoidance Schemes (Information)(Amendment) Regulations 2007 were laid before the House of Commons on 24 July and will come into effect on 1 September 2007. They prescribe time limits for complying with obligations arising from the new powers.

A draft of The Tax Avoidance Schemes (Penalty) Regulations 2007 was also presented to the House of Commons on 24 July. These regulations require the approval of the House, and if approved will increase the maximum daily penalty from GBP600 to GBP5,000 in cases where non-compliance continues after the Special Commissioners have made a disclosure order. They will come into force 21 days after the House’s approval. Approval is subject to the Parliamentary timetable and will not be before late October.

Subject to approval of the Penalty Regulations, it is intended to make regulations specifying the time from which the increased penalty is to apply after certain disclosure orders. Commencement of those regulations will be synchronised with commencement of the Penalty Regulations.

HMRC said that these Regulations are not expected to impose any significant new costs on compliant promoters or businesses.

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